Apple's new subscription policy may face antitrust claim

Mark Raby, 18th February 2011

Apple has already ruffled a lot of feathers by changing its iPhone app policy for developers who make subscription-based software for the mobile platform, but now it may face more serious charges as a new push to get the government involved gets underway.
Apple was not happy about the fact that apps like Rhapsody, Netflix, magazines and newspapers are "free." That is, users can download the apps for free, which means Apple doesn't get any money.

However, once inside the app, users have to sign up for the developer's subscription service, which is completely handled by the developer itself. In other words, there's money being exchanged over the iPhone for an iPhone app, but Apple isn't getting a cut of it.

Needless to say, Apple doesn't like that.

So it changed its policies. Now, developers are actually required to let users sign up for the subscription fees via Apple's payment system. So, for a $9.99/month subscription, Apple would be getting a cut of that every time the user pays.

Music service Rhapsody declined to accept the new terms of service, and pulled its app from the App Store. Other developers have expressed strong dislike for the new policy.

But now it's going beyond just a heated exchange between Apple and developers. Companies are now appealing to the Federal Trade Commission to launch an investigation into whether or not the idea of forcing a developer to use Apple's proprietary payment system is in violation of antitrust laws.

To do that, it would need to be proven that Apple is the leader in this kind of service. That could probably be proven.

This isn't the first time Apple has faced antitrust challenges and it won't be the last. But the question is how the company will respond, or will it have to be forced to respond?